CapitaLand Investment Earnings: Special Dividend a Positive Surprise, Shares Undervalued

CapitaLand Investment’s, or CLI’s, second-half 2024 net profit after tax and minority interest, or PATMI, improved to SGD 148 million from a loss of SGD 170 million a year earlier. Revaluation gains in India and Singapore have helped to offset revaluation losses in China and the United Kingdom. Shares increased by 4.8% on Feb. 28, given the positive surprise of a special dividend of SGD 0.06 per share, on top of its unchanged common dividend of SGD 0.12 per share. The special dividend comprises 0.031 CapitaLand Integrated Commercial Trust units per CLI share. The group will revise its dividend policy to a minimum of 50% of cash PATMI, up from 30%. However, we do not expect the change to result in a higher dividend, as the current dividend payout ratio is already at 81% of cash PATMI. Overall, the performance was in line with our expectations, and we keep our fair value estimate of SGD 3.30 per share. While the shares remain undervalued, our top pick for asset managers continues to be Keppel Ltd, as we believe it is well-positioned to capitalize on strong secular growth trends in the infrastructure and data center markets.